Cant sell my hotel

chickmug

Firstly let me explain about Business Transfer Agents who are the firms that usually tout for businesses to sell and as already said many of them make the worst Estate Agents look like angels. If you read the Daily Mirror link I gave on the forum earlier you can see more. This covers a lot of agents including Knightsbridge, SBS, RTA, Bag a Business and others that seem to rise up, scam business owners and disappear only for a new name to emerge and with the same faces behind them.

This type of operation relies on Up Front fees and typically for a hotel at your price would charge £1,000 upwards on the promise that, because they are specialist and big, they uniquely can attract more buyers, better buyers and get a higher price for you than any other agents, certainly better than any locally based agent or Estate Agent. Their staff are usually not that experienced and do not have the slightest interest in you or your hotel but just want to sign you up, take money off you and get a signed agreement that usually means they can exhort more money off you in due course. This could be a year or even more later and they will be watching to see if you sell and try and get you for some form of payment under their contract. The staff are salesmen and very reliant on commission. They get payments for every new business they take on and they do NOT carry out an in depth analysis of what the right selling price should be. They do NO homework but visit and think of a figure well in excess of what they know you will want and be very optimistic of their being able to sell. The further irony is they aren’t bothered if they sell or not as they have already earned money and then so will drop down very heavily on you to drop your price in the basis the market has toughened up since they first met you.

With these companies it is usually doubtful you will ever meet, or speak to, the person who saw you. It will be dealt with a by a call centre, who may not remember your name or the name of your business. Anyone who tried complaining is often surprised at the response they get. Rudeness and often extreme rudeness.

I have come across many many examples of business owners getting ‘done over’ by them over a very long period of time now. So my advice to you is to gather all the contracts you have signed with all the agents and get your solicitor to look over them to advise you as you may have something sinister lurking in the background which could cost you dearly. At the very least scrutinise them yourself.

Now onto the problem of selling your hotel. Well the hotel selling market generally reflects the problems in the private housing market which has been very very poor over the past year. The finance to buy a business often comes from the proceeds of sale of another property whether that be a business or a house. Sometimes it may come from the commuted cash sum from a pension but I doubt by that time those age groups would take on you place. However at the right price a better response would of been expected in the first year or two on the market. Businesses do take much longer than a house to sell whatever the state of the market and it is common for them to be on the market for many months and even a year or even more. Even more is often the case where owners are looking for a price well in excess of the reality but at the right price there should have been some more action, before now, by way of viewers.

Top notch details with the best of pictures may fool a few more people into viewing but when they get there it is up to the proposition on the ground to wow them. However you do need to make sure the details are the very best you can achieve and I am a great believer in pictures speak more than a 1,000 words. Looking through all the pictures on various agents details and on your own web site I would say you ARE in urgent need to upgrade. Some of the better agents can do this but some may suggest a professional photographer which is spending but one key area of spend that should have an affect.

The hotel is sadly just another hotel of its type in a resort full of others very similar so both in terms of day to day business and well as being on the market it is a tough one. Some agents (some f the right ones) would decline to take it on due to its poor prospects of getting a sale. It would be more trouble than it is worth. Sound callous but some agents will give blanket refusal to deal with any in Blackpool not just yours.

I have no Blackpool experience but have plenty in another big resort. When valuing in this other type of resort there are significant differences of the actual locations - edge of town, middle of town, proximity to shops, proximity to beach so ‘one mans meat is another mans poisen’ as far as where potential buyers feel they want to be and to run this type of business. So my view was always to find the unique aspects of each hotel on the basis of potential buyer will each have their own unique requirements.

In these types of resorts there are usually one or two big agents who will get most of the hotels on the market. You will know the one/s in Blackpool but in Bournemouth it is Goadsby and in Torbay Bettesworths or Waycotts. However the Market has been extremely poor over the past year or so and I know business agents who have been reliant on the smaller leasehold sales for their turnover as freehold sales are few and far between. Far worse than the private market. So whatever you do you may still have a long wait. So if you can improve the turnover it can only make it a little more sellable but six months of better figures will not really do the trick as today’s buyers are looking at several years accounts and analysing the growth shown. You already have a lot of suggestions given about improving the business but I more than many do realise the difficulties in this type of resort, with low room rates, and the target market you are serving. A target market who do NOT want to pay more no matter what your do. I know of a handful of hoteliers who are the absolute ‘bees knees’ in their business and wherever they buy will get it zipping along from day one. However these people have one thing in short supply - the money to upgrade to suit their business model.

Looking at Daltons and Businessesforsale and other web sites your hotel is on with a number of agents and not all with the same price. Even the best of them is very poor in terms of marketing. So if you are using them all as Multi Agent you need to get the prices standardised. But bear in mind my earlier warnings about agents and are you sure you have de-instructed correctly where necessary.

Auctions, from my perspective, are OK in two scenarioss:

1) Where you know there IS interest from at least two parties and are not sure of what the price should be so an auction, or sealed bid, can maximise the best price for you.
2) Where there is a desperation to sell no matter how low and you will get in the vultures.

So I am of the opinion, in your type of sale, auctions are NOT the way to go unless you want to give it away.

So onto price which is the real key to selling? But how do you get an agent to tell you the truth when all they are after is your instruction even though it would never sell at the price they really fee and they don’t want to alienate you by telling you the truth. A similar logic applies to valuation as in the private housing market which is Freehold + F&F’s + Goodwill but in your case I would suggest the goodwill has virtually zero value and the F&F’s that are included with the asking rice have no premium value so really only freehold figure. So take a look on the web sites that give today’s value based on your input such as date you bought, price you paid and today’s date which will give some idea but is only one component of the valuing process.

Where do you get the right and truthful advice bearing in mind what I said at the outset about the crooks around? Do you know any hoteliers association in the town, or solicitor or accountants who have had clients with hotels from which you can ask about recommendations for an agent. In my case I often worked with a local estate agent on a joint agency basis as I had those local agents who knew the local developers. When it comes to the specialist agents Christies is the biggest but would be an expensive commission rate and you will probably be expected to pay for advertising. They are one of the few who have employee with experience and will have one specialist person working from their regional office doing nothing but hotels and guest houses. Most other agents will be franchise operations and the salesman you would deal with may only have 5 minutes experience. However any should do a free valuation including Christies.

One excellent source of a very good standard of valuation is to get a Pinders Report the Rolls Royce of valuation in the business but expensive. At least they will comb through all facts and discuss with you and as they are not agents you should get truthful advice. This is the option I would suggest you take a serious look at and it could be an excellent document to use when selling - providing it is not too damning of your place!

http://www.pinders.co.uk/index.html


Onto alternative uses. Self catering flats but that market is just as dead and no one is looking to go down that route. Someone has said a house but no one wants a house that big. Developers are not buying like they were when prices going up. They bought low, spent as little as possible, then put the price as high as possible. Sadly no longer the case and it is of a size where the local developer/builder would be too scared to taking the risk. They are usually looking for smaller risk properties. As I said a good agent should be in touch with developers but like auctions it will result in low offers. So could you develop yourself? I have seen many who decided to do just that and virtually all pulled out and handed over to a specialist because they have bitten off more they can chew and didn’t have enough money to finance. Have you contacted all the architects in the town to see if any have any clients looking - send them a mailer.

You are selling a huge amount of work with an extremely poor turnover and so poor Net Profit for all the obvious effort. Not a criticism but a fact. I would expect the turnover to be several times more in the areas I have known buy stressing I do not know Blackpool. I have seen very successful 8/10 bedroomed hotels start from scratch, run by the really clued up operators, reach just under VAT by their second year with £40,000 Net Profits.

Onto who will buy your hotel? The usual profile would be multiple members of the same family typically one who is a chef. Parents with children again one who is a chef, Parents with one of their children and their partner, brother and sister couples, sometimes but not often several friends. It could be a sinle couple but those without experience would be very daunted at going in at this size. It could be a couple with relevant experience who are in the resort looking to upgrade - so have you or your agents done a flyer to the other hoteliers?

One thing for sure is those without or with very little experience will be dissuaded if they get their accountant to look through the figures. If I were wanting to buy a hotel I would be looking elsewhere in the country where the same Net Profit can be made from 10/12 bedrooms so less to feed, less bogs to clean. No evening meals, and less bedding to wash or have laundered.

Can’t think of much more now but you need to prepare an action list and be focussed.

moneymouth77

Or alternatively, simply wait a little longer, the market's still going down (http://money.sky.com/mp/features/news/2009/07/08/House-prices-down-another-05.html), then see what it's like in a couple of months.

Currently, you'll have trouble selling AND not make your money back!

Conrad

I'm finding most lenders won't touch hotels or pubs, as they are percieved as very high risk.
I'm just pouring over a survey of a very nice profitable home counties pub right now, and even that contains some very negative comments such as those that pertain to the expected 50% reduction in sale price were the owners to be repossessed where licenses were in jeopardy and all inventory had been removed and the place wrecked (by the bitter repossessed owner).

Such risks along with increasing unemployment and the self fulfilling spiral of debt tightening, means raising finance for a hotel is pretty much impossible.

The best rate I've achieved on the pub above for example is 15%, and that's with a 35% deposit. No high street Bank was willing to lend. The clients are going for it though!

TTMCMschine

And so it makes the best sense right now for him to turn the business around & sit tight until better times.

slowdog

to be honest with you, i honestly feel that there is only so much i can do to attempt to improve TO. like i said, until the town gets busier, its not gonna be easy. thats not to say i shouldnt maximise my chances as much as possible

the size and nature of the business is what is really stopping us selling. chickmug speaks the truth. who the hell is going to buy this place? a new evaluation will stand us in a better position, but in truth, we really are not going to sell to someone wanting a hotel / big guest house.

there are two things on the horizon that stand us in good stead for a sale to a developer; a (probably) university/colleg campus 2 minutes away and a current local council desire to reduce beds in the resort, modernise properties, and so on. as we are in a totally residential street, it would make sense that they would like to convert the property. both of these are likely some years off yet.

Willsnarf1983

I've just booked two nights in Blackpool from lastminute.com, the internet is definately the way to go!

The darts is on in a weekish so business should be fairly good as its always popular!

Will

AnnaV

slowdog wrote: »

there are two things on the horizon that stand us in good stead for a sale to a developer; a (probably) university/colleg campus 2 minutes away and a current local council desire to reduce beds in the resort, modernise properties, and so on. as we are in a totally residential street, it would make sense that they would like to convert the property. both of these are likely some years off yet.

Is it not worth exploring these options now? Turning the hotel into easily rented student flats sounds like it would be easy money for a developer. Or even a house for halls? Can you find out if they will need halls?

slowdog

theres no point exploring these options till funding is finalised for the college, and the council make up their minds / get permission / get funds for their own redevelopment work. basically, on both counts, we're just keeping our ears open.


with regards to somewhere like last minute.com, im dubious about how it would work. i've always been trepedacious about online booking. the reason for this is because we dont employ a receptionist......that duty falls to me. however, it isnt just me that takes bookings. yes, we (I) use a computer to sort all that out, but we also have a paper back up. that is used a: by the wife and another member of staff when arrivals come, and b: back up in case the computer crashes.

so why the trepedation? well, say i take a booking on the phone for a family room. the last one available for a particular weekend. at the same time, someone online makes a booking for the exact same room. needless to say, thats a problem. it would mean that someone would have to constantly check for bookings

lynzpower

hethmar wrote: »

Forgive me, not read all of this, but - just a point, me and thousands like me search for a hotel looking for the words "pets welcome" - they are the only hotels we ever stay in because we have two small dogs.

Do you accept dogs? You can charge extra for them - advertise on the dog friendly sites - even Dogs Trust links to pet friendly hotels now.

People with dogs also tend to look for out of season accommodation, when their pets can go on the beach.

I have to second this!!! Great suggestion.

We too have a little dog adn always struggle to find pet freindly last minute accomodation- definately a winner!!

ladypinkof66

lynzpower wrote: »

I have to second this!!! Great suggestion.

We too have a little dog adn always struggle to find pet freindly last minute accomodation- definately a winner!!

i agree we dont go anywhere in this country with our dog so we too always look for dog friendly and they are few and far between